Employee Share Ownership Plans – ESOP's new data from OEOC conference
Whilst we await new changes to taxation law around ESOP’s in Australia, hopefully being implemented later in 2014, a recent review of ESOP performance and popularity in the USA suggests we should get the changes through as soon as possible and get on with it !
There are now over 10,500 ESOP’s in the USA ( 95 % in private businesses ) and approx 3,500 majority or wholly owned businesses (owned by the employees). The recent research strongly supports the improvement in performance which underpins the ESOP model we support, and which when used effectively can fund the profit share that “feeds” the plan and encourages employee engagement. The National Centre for Employee Ownership provides a summary of key academic studies on ESOP’s and corporate performance.
The studies highlight the performance impact over non-ESOP businesses:
Sales growth +2.4%
Employment growth +2.3 %
Productivity growth +14.8 %
Return on assets +5.5 %
Net profit margin +10.3 %
Wages 5 – 12 % higher
Total retirement assets 2.6 times greater
In fact their is very little, if any, negative academic research on ESOP’s and their effect on company performance.